The Liquidity GrabI'm going to do my best here at explaining the basics around a liquidity grab (some times called a stop hunt), why it happens and how it works (ignore the chart I'm using, I'm not saying this is a manipulated move just showing you an example of how it works)
I often refer to this in my playbook as an STL "Sweep The Legs" coupled with a picture of Johnny Lawrence from the karate kid lol
First you need to understand that Big money plays a different game to retail.
When you want to place a buy order at a specific price point, lets say your buying a thousands dollars worth of BTC @ $30,000, you can put an order in and boom it gets hit your filled and your ready to go to the moon.
Now imagine some bigger traders who play with a lot more money than you, lets say there order is more like a billion dollars.
Well in order for them to fill there position, there needs to be a large amount of selling at that level other wise they may only get a small piece filled...... theeeeeen of course the price moves away and your priced out of the market (imagine putting your $1000 order in, only getting $10 of it filled and then having the price moon....yeah it would suck)
They do not want to chase candles or buy up the order book, thats just not good business, and if you have to do that in order to get your orders filled thats a good indication that there is already liquidity issues within this market and you may have a similar problem trying to cover of your position later on.
So these players some times need to hunt down and find or even artificially create liquidity pools for them to take a big bite at like pigs at the trough.
One of the easiest ways to do that is to look for the most obvious levels of support with in a trend of sideways channel and look at the buying thats happening on that level.
If we dont get an instant recovery or bounce at that level it can normally indicate price being trapped or held down in order to encourage more retail to "buy the dip" or buy on support as these are some of the most basic tools and strategies taught to retail traders.
Now one thing to remember when all of these traders/investors are in there positions from this level, there will be a large number of these traders protecting capital with stop losses, normally under the level they where buying at.
This now created a liquidity pool...... You see every stop loss on a BUY order, becomes a SELL order, and with so many BUY orders created and entered at a specific level that means the stop loss orders are stacking more and more on top.
Think about it like this, if we hit 30k and someone buys $1m worth, that means there is possibly a SELL order (via a stop loss) of roughly 1m under that level.... now we hit that 30k level again, and someone buys some more, maybe another $1m worth... well now there is roughly $2m worth of SELL orders in that stop loss zone. Hit that 30k super sweet safe support level 5 or 6 times and all the sudden you could have 8-10m worth of SELL orders at a single price point below support.
Now if I wanted to enter this market long and I had 10m order to fill, it would make sense for me to run the price down to clip these stop losses creating a large amount of selling straight into my pig of a buy order.
Once my orders filled I can stop holding the price down and let the price begin to organically rise again, this often creates fomo for all the retailers who just got knocked out of there trades from "tight stop losses" to chase the market back in only adding to the momentum and mark up of my position.
The same thing can happen in vice versa when they are covering or exiting a position as well, and its often followed by a square up to reduce or remove the risk taken on to manipulate the price during there accumulation or distribution of there order, more specially into a short position as they take on more exposure to the underlying asset to manipulate the price, in a long there exposure is fiat and there isnt any need to cover. (ill explain square up in detail next time)
This is often what is referred to as a liquidity grab and its how big players enter the market, they do not chuck a limit order in on Binance and hope for the best...
I hope that made sense and added some value, but if you have any questions please chuck them below
Stophunt
USDCHF LongGood afternoon ladies & gents,
Crazy good day today. Opportunities every all day on all pairs.
Here's a little freebie for you.
USDCHF has stop hunted a significant daily low & previous H4 Low.
After breaking market structure we have our lower timeframe entry confirmations to look for a long.
The Monthly + Weekly indicate a rally in USDCHF.
In light of Dollar strength, this move will be catalysed by Swiss Weakness.
Good luck!
-AmplaFX
I backtested FXCM's Ideas 100 TimesI backtested @FXCM 's ideas 100 times with several strategies.
This research contains:
(1) If it is worthy to buy cheaper than @FXCM 's signal.
(2) If it is worthy to hunt @FXCM 's stop loss.
(3) If @FXCM 's signals take profit too quickly.
(4) If the price approaches @FXCM 's target, will it go back to buy entry?
There are 5 strategies in this test case.
(1) Original : follow @FXCM 's entry, stop loss and profit target.
If there are 2 profit targets in an idea, I treat it as 2 trades.
If there are no profit targets in an idea, I use 1:1 risk ratio.
(2) cheapo_q : shift down entry, stop loss and profit target by ( entry - stop loss ) * 0.25 .
(3) cheapo_h : shift down entry, stop loss and profit target by ( entry - stop loss ) * 0.5 .
(4) hunter : shift down entry, stop loss and profit target by ( entry - stop loss ) .
This strategy is for hunting @FXCM 's stop loss.
(5) reversal : entry of reversal = @FXCM 's target , target of reversal = @FXCM 's entry.
Stop loss of reversal : use 1:1 risk ratio.
Quantity per trade:
50 shares for xau
100000 shares for eur,gbp,aud,nzd,usd,cad,chf
result
Strategy Win-Lose Profit-Loss
Original 45-50 31366.57 - 19460.67 = 11905.9
cheapo_q 29-44 20080.97 - 16040.95 = 4040.02
cheapo_h 26-36 19006.84 - 12609.71 = 6397.13
hunter 16-27 8809.81 - 8759.51 = 50.3
reversal 25-20 15816.03 - 14381.96 = 1434.07
Observation
* Some signals were generated when breakout, so waiting for pullback may miss some opportunities.
* Advice : also consider basics and sentiments to avoid non-profitable trades.
* Hunting @FXCM 's stop loss is not profitable enough.
* @FXCM 's followers can consider higher profit target but need to protect difficult-to-get profit.
EURNZD, Long Opportunity, RR 1:14Goood morning ladies and gents,
EURNZD is poised to see higher prices today.
It will rally up to the area marked as the final TP over the next week.
Why?
Simple. There was a consolidation (range) condition prior to a break to the top side. This induced retailers to look for longs, anyone who went long would have their maximum stop below the low of the range. Typical trading systems, lol.
Price stop hunted to the other side of the range as expected, then cleared the EQ lows at the other side. This in turn, induced retail traders to look for shorts.
However, we're currently in a Daily Bullish Institutional Orderflow with a clear objective to the topside.
It's worth noting that although the daily structure is bullish, we're still in a weekly & monthly sell structure. Hence a TP at 1.68870 is advised as it's a potential point of reversal".
Aligning seasonal tendencies with this technical perspective, it shows that EN tends to rally higher from the beginning of May until Mid May where a huge sell off begins, in line with our Weekly & Monthly sell structure bias.
That's it for now.
Take care.
Understanding the NFP EU PumpHere are some questions I put out to my community group the other day followed by the answers. The reasoning being the move has been annotated on the chart.
Why did price slowly decline prior to NFP?
- Price had to decline slightly before NFP to mitigate the impulsive move created earlier in the day.
- Price had to stop out break and re-test buyers with a tight stop loss
- Price had to lure sellers into the market before NFP
Why did price reject the exact box marked before skyrocketing?
- Price skyrocketed because it had gathered enough liquidity from stopping out the buyers.
- It utilised the previous order block to skyrocket to take out the impulsive sellers before NFP.
AUDUSD H1AUDUSD H1
Price is near the weekly low of the previous week. on the daily and weekly price failed to make a new high to the up and retraced back. Expecting that price will make head down to grab some liquidity for going up. For now highly likely price will retrace up to fill some liquidity before going down.
WOLFWAVE on daily timeframe on BTCUSD 🚀🚀Found Bullish wolfwave pattern on the daily timeframe which doesn't occur frequently so it can be a very good bullish sign for btc. i can see 70-80k number coming in btc in few weeks. the target is the trendline touch btw the 1-4 wave.
please do let me know your views on my analysis.
GBPJPY H1 As u can see, the price was consolidating for a long period of time more than 150 hours...
As u can see on the bottom price gained some liquidity below and all the stops were hunted.
Next we can wait for build up at the top near the resistance and enter on the breakout.
Remember, Patience is a key, u need only 1 - 2 trades a week having a good R:R to make it good on the long run.
Stay tuned, we will update u soon providing a valid setup for trading.
XAUUSD TRADE IDEAPrice creates liquidity from clearing equal highs at around $1750, following the double bottom formation formed at $1680, which created liquidity from a 450 pip stop run after clearing equal lows from 8th March. Price balanced out the previous imbalanced bearish move to $1680, and a bullish move to the liquidity sitting at around $1750 followed shortly after, as expected. Now I expect the price to retrace back to around $1700 to clear the imbalance created by the last bullish move.
This anticipated direction also supports my bullish bias for DXY, which I expect to retest near the 92.900 level.
TRAP FOR POOR RETAIL TRADERS on AUDNZDPrice has approached the top of a very visible parallel channel as well as a resistance area.
It's dangerous to trade short as big banks, hedge fund, institutions will have the opportunity of a big amount of liquidity that they will use to fill their orders. Basically they might drive the price higher with big capitals, and hit all retail trader's stops.
Be carefull.
GBPJPYFollowing the sell-off the happened yesterday, a possible reverse trend opportunity has presented itself.
This pair is currently in its pull back after a big drop phase, a possible sell entry at tomorrows top side to continue the sell run or if the channel does not hold, we can see him turning the trend around into buyers territory.
GoldBull Update
Based on my 1h analysis I initially posted before this,
- Gold with a beautiful bullish engulfing at the second shoulder.
- move can proved incorrect if shoulder does not hold.
- v2 area
AUDUSDFollowing the break of the inverse head and shoulder neckline which confirmed our bullish continuation run, retail breakout traders came in full force only for the forces that be to clean the table with a strong attack to the stops.
Todays low has been set and it confirms buy support from yesterdays low.
I am expecting more bullish run to the up-side with plenty of entry opportunities to come.
How To Avoid The Market Makers Stop Hunt Movement As part of the daily movement in the forex market is the stop hunting done by the market makers. They don't mean to hunt the normal and small trader at all, they are targeting the big investors and hedge funds you just happen to be in the wrong place at the wrong time.
As shown in No.1 this huge wick is an obvious stop hunt movement in this case the market makers are hunting the ones entered in the middle or at the end of the uptrend. Lesson learned here
"NEVER ENTER A TRADE IN THE MIDDLE OF A TREND ALWAYS WAIT FOR A RE-TRACEMENT"
In NO.2 after the price gave a good bearish signal ( hanging man candlestick ) it made a a shooting star candle with huge wick to hunt the stop losses. in this case lesson learned here
" WHEN YOU ENTER A TRADE WITH PRICE ACTION MAKE SURE TO PUT YOUR STOP LOSS ABOVE/BELOW IT WITH AT LEAST 20 - 30 PIPS"
In NO.3 when you trade you will see this low (blue line) broken so you would assume that it will continue to the downside and after you enter a sell trade NO.3 will occur. Lesson learned here is "DON'T ENTER AT THE END OF A SMALL TREND AND USE A GOOD BREAK SIGNAL"
And a last tip " TRY TO THINK AS A MARKET MAKER AND ANTICIPATE THE AREAS THEY WOULD HIT AND PUT YOUR STOP LOSS ABOVE/BELOW IT BY 20-30 PIP"